OPPORTUNITY
To create a fast-growing, unique food company of scale with one of the best-in-class teams.
APPROACH
Acquire, integrate, and cultivate highly differentiated brands to provide consumers with delicious food experiences.
IMPACT
From an initial team of six people in 2017, the company has grown to more than 700 employees and achieved USD $1 billion in net sales in 2023. During Advent’s ownership, the company continued to expand the branded platform and grew to play within a total addressable market of $50 billion by exit. Within a seven-year period, Sovos Brands went public and was subsequently acquired by Campbell Soup Company.
Identifying the secret sauce
The packaged food market was valued at $3.1 trillion in 2023 and is estimated to reach $5.32 trillion by 2032, according to sources. Packaged food provides consumers convenience while saving time and money, and bringing busy families together at the dinner table. There is a growing appetite for brands that are delivering healthier and great-tasting products among consumers, and Sovos Brands proudly creates delicious food made from good quality ingredients that never compromise on taste.
From the beginning, Sovos Brands’ executive bench set it apart. In 2017, we partnered with seasoned executives Bill Johnson, an Advent Operating Partner and former Heinz CEO, and Todd Lachman, an experienced consumer goods leader, to help create a unique platform featuring great-tasting consumer-packaged food from various brands. With our support, the Sovos Brands team built and developed a portfolio with a range of products that now include pasta sauces, dry pasta, soups, frozen entrées, frozen pizza, and yogurts.
Working alongside Johnson and Lachman, we assembled a focused team to turn Sovos Brands into pantry staples. United by the shared goal of creating a unique food platform, the Sovos Brands team was enabled to take calculated risks and innovate. Beyond the executive team, Advent played a substantial role in building out a robust Board of Directors that provided governance and oversight to the company and team, while also working closely with the management team to execute the ambitious growth plan it set out to achieve.
The Sovos Brands platform began with the acquisition of Michael Angelo’s, an authentic, premium, clean-label frozen Italian entrée brand in 2017. This was followed by the acquisition of Rao’s Homemade, a premium sauce brand, in the same year. In 2018, noosa – a yogurt manufacturer and existing Advent investment – was folded into the Sovos Brands portfolio. Birch Benders, a producer of pancake and waffle mix, was also acquired in 2020 and ultimately divested in December 2022.
Each brand had a bespoke value creation plan. For Michael Angelo’s, this meant minimizing operational complexities, improving inventory management, rebranding, and maintaining Italian authenticity. The team transformed noosa from a “lil tubs” brand to a new single-serve offering, introduced multipacks, expanded into subcategories such as cheesecake bites and gelato, and capitalized on operational savings. Rao’s Homemade, an under-developed premium pasta sauce brand carved out from its famous New York restaurant sister company, was not only expanded nationally but also extended into adjacent categories, such as soups, while staying true to its Italian roots.
“In partnership with Advent, we built a one-of-a-kind food company focused on taste-led products across a portfolio of premium brands, anchored by Rao’s. Together with our Board of Directors and Advent, we built one of the fastest-growing food companies of scale in the industry”
Todd Lachman
President and Chief Executive Officer, Sovos Brands
Finding the right blend
After successfully recruiting top talent from the consumer-packaged goods industry, under Lachman’s leadership Sovos Brands cultivated a winning culture with a “roll up your sleeves and make it happen” attitude. Colleagues at both Advent and Sovos Brands were the binding ingredient.
Sovos Brands relied on strong partnerships with suppliers and robust business relationships to maintain mutually beneficial collaborations. The team developed a unified and one of the best-in-class salesforces to meet the demand of driving significant retail distribution. Careful consideration was given to distribution and innovation, ensuring that growth was built in a measured way, supported by strong, underlying sales velocities and supply chain capabilities. One of the primary objectives of the Sovos Brands strategy was to deploy intentional marketing spend to drive household penetration for brands that began lower than the category. This was done by a joint effort across sales, marketing, and other parts of the organization to maximize distribution and awareness of the brands both in store and via marketing campaigns. Despite modest marketing budgets, consumer passion for Rao’s was achieved through traditional word-of-mouth and social media coverage.
We also supported Sovos Brands in developing a differentiated platform approach to M&A. Starting with identifying and sourcing M&A targets, Advent was able to leverage its industry presence and constellation of external partners to build a robust pipeline of new deal opportunities. Subsequently, we combined Sovos Brands’ nimble culture with the support of Advent’s diligence and value creation planning experience to effectively execute the M&A pipeline to acquire all four brands within the Sovos Brands ecosystem. This scale and attractive portfolio was crucial for the business to go public in 2021.
Sovos Brands remained a lean and highly disciplined company with an appetite for aggressive growth. In partnership with management, we were committed to operating the business profitably, but never compromised our high-quality standards.
During COVID-19, Sovos Brands also had to navigate extraordinary supply chain constraints and cost inflation that impacted the entire food industry. These challenges were even more daunting due to Sovos Brands’ above-market growth rates, but the company was able to successfully maintain product availability thanks to the agile and creative management team.
As it prepared to go public, Sovos Brands, despite its short history as a company, had to efficiently invest in upgrading technology, systems, and infrastructure without slowing down its progress. In response to the soaring demand for Rao’s products in particular, Sovos Brands swiftly shortened innovation cycles and expanded into categories such as pizza and frozen entrees.
The dessert
After completion of the core elements of the value creation plan, the team explored with management pursuing an IPO, as a public offering presented a favorable route to exit. Ahead of going public, Sovos Brands built and maintained a strong Board of Directors to work actively with management across the sales, marketing operations, and finance functions.
The company successfully listed on the NASDAQ exchange in 2021. Following the IPO, and amidst an ever-evolving operating environment, the management team continued to display agility as they responded to supply chain and inflation-related headwinds, as well as pricing pressures. In addition, Rao’s continued its remarkable growth, posting USD $775 million in net sales in 2023 and gaining recognition as a premium brand.
“We fully immersed ourselves to support the Sovos Brands team. From the formation of the brand to its IPO, and then the ultimate sale to Campbell Soup Company, each move was strategically crafted and executed by a determined team hungry for a lasting impact.”
Jeff Case
Managing Director, Advent
Advent remained an active shareholder with three seats on Sovos Brands’ board after the IPO, and continued to leverage its sector expertise to support the company.
Sovos Brands expanded exponentially during our investment period, becoming one of the fastest-growing packaged food companies with an impressive net sales CAGR of 21% achieved between 2017 to 2023. Notably, the company was one of very few in the industry to drive substantial volume growth despite managing commodity pressures and price increases in 2023.
The business was sold to Campbell’s in 2023 and our team looks forward to the continued success of the Sovos Brands under Campbell’s leadership.
